| Requirement 1 | |||
| ($ in millions) | 2016 | 2017 | 2018 |
| Contract price | $250 | $250 | $250 |
| Actual costs to date | 80 | 120 | 150 |
| Estimated costs to complete | 120 | 30 | – 0 – |
| Total estimated costs | 200 | 150 | 150 |
| Estimated gross profit (actual in 2008) | $50 | $100 | $100 |
Gross profit (loss) recognition:
2016: $80
= 40% x $50 = $20
$200
2017: $120
= 80% x $100 = $80 – $15 = $60
$150
2018: $250 – 150 = $100 – ($80 + 20) = $0
Requirement 2
2016
: $250 x 40% = $100
2017:
$250 x 80% = $200-100 = $100
2018
: $250 – 200 = $50
Requirement 3
| Estimated Gross Profit in 2017 | 0 |
Requirement 3
2017: $120
= 60% x $20* = $12 – 20 = $(10) loss
$200
*$220 – ($40 + 80 + 80) = $20
| ($ in millions) | 2016 | 2017 | 2018 |
| Contract price | $250 | $250 | $250 |
| Actual costs to date | 80 | 120 | 150 |
| Estimated costs to complete | 120 | 120 | – 0 – |
| Total estimated costs | 200 | 240 | 150 |
| Estimated gross profit (actual in 2008) | $50 | $10 | $100 |
| 0.4 | 0.5 | 1 | |
| $20 | $5 | $100 | |
| 100 | 125 | 250 |
